) to buy from neutral.
Analyst Jay Vleeschhouwer says the software maker's third-quarter results were better than he expected, and he has visibility on the fourth quarter. He says Adobe continues to benefit from having a more diverse revenue stream than it had historically, while operating margins remain the best in his coverage.
Vleeschhouwer notes Adobe has predominant share in markets that matter most to it. He raised the 30 cents fourth-quarter earnings per share estimate to 31 cents, and upped the $1.07 fiscal 2003 (Nov.) estimate to $1.12. He also raised the $1.24 fiscal 2004 earnings per share estimate to $1.30.
Vleeschhouwer set a $48 target, and believes the shares deserve the premium valuation as Adobe today is a more profitable, better managed, and more diversified company.